The UK has a prescriptive statutory residence test, the SRT. Under the SRT, with reference to certain factors and day counts, individuals can precisely when they will or won’t be UK tax resident. The clear tests set out in the SRT means individuals can plan travel and circumstances to become non-resident. HMRC also benefit – they have clear lines of enquiry through which they can assert UK tax residence.

Given the extensive legislation and guidance there are few areas of grey within the SRT. People can easily determine whether they were in the UK at midnight, or whether they have access to a UK home (the guidance even covers cases where that home is a “holiday houseboat” or place to say through a “casual offer from friend”).

However, one of the more subjective areas of the SRT is the concept of “exceptional circumstances”.

What are exceptional circumstances?

“Exceptional circumstances” are relevant when counting days back in the UK. Under certain residence tests within the SRT, up to 60 days in the UK can be ignored if they are due to exceptional circumstances.

This concept is generally given a narrow interpretation by HMRC. Events must be exceptional, beyond a taxpayers control, and the taxpayer must intend to leave the UK as soon as circumstances permit. In a conflict scenario, it can apply only where the Foreign, Commonwealth & Development Office (the “FCDCO”) warns against “all travel” to a jurisdiction.

Of the jurisdictions in the region, at the time of writing this this includes Afghanistan, Iran, Iraq, Israel, Palestine, Syria and the Yemen. It does not include the United Arab Emirates (where “all but essential travel” is recommended by the FCDCO).

What if the exception does not apply?

The exception does not apply to all areas where day counts are relevant in the SRT.

However, individuals are advised to consider the implications carefully as inadvertently becoming UK tax resident could result in an individual becoming liable to UK income tax on their worldwide income and gains, at tax rates of up to 45%. The effect is particularly pronounced here given most of the jurisdictions listed above do not levy income tax, and individuals may seek to mitigate the impact by either spending time in other jurisdictions and/or looking to rely on exemptions under tax treaties.

This is a complex area of law and individual advice is important, particularly as events are quickly moving the dial on how the rules apply.